The Japanese attacked the naval base at Colombo, Ceylon, sinking the armed merchant cruiserHMS Hector (which was due to be released back to trade) and the old destroyer HMS Tenedos in the harbor. Eighteen Japanese planes were lost to heavy anti-aircraft fire. The Japanese only admitted to five losses, three of them over land — as only three destroyed planes were discovered on land. The RAF lost at least 27 aircraft. Japanese search planes located Cornwall and Dorsetshire — commanded by Captain Augustus Agar—200 mi (170 nmi; 320 km) southwest of Ceylon. A second attack wave sank the ships, killing 424 men. In the late afternoon, just before sunset, at 16:55 and again at 18:00, on 5 April 1942, two Royal Navy Fairey Albacores operating from the British aircraft carriers made contact with the Japanese carriers. One Albacore was shot down and the other damaged before an accurate sighting report could be made, frustrating Admiral Somerville's plans for a retaliatory night strike by his ASV radar equipped Albacore strike bombers. Somerville continued to probe for the IJN carriers on the night of 5 April 1942 failing to find the IJN ships. The RN's only opportunity to launch a strike against enemy aircraft carriers faded away.[3]

On 6 April heavy cruisers Kumano and Suzuya with destroyer Shirakumo sank the British merchant ships Silksworth, Autolycus, Malda and Shinkuang and the American ship Exmoor.[4] Also on 6 April, the Indian sloopHMIS Indus was sunk by air attack off the coast of Burma, off Akyab.

On 9 April, the Japanese attacked the harbor at Trincomalee at 07:00. The British again had warning of the attack, and the carrier Hermes and her escorts had left the night before. They were returning to port when they were discovered at 08:55. Hermes had no aircraft on board, and so was defenceless when 70 bombers attacked her at 10:35 off Batticaloa. Hit 40 times, Hermes sank with the loss of 307 men. The destroyer HMAS Vampire and the corvetteHMS Hollyhock were also sunk. The hospital ship Vita later picked up 590 survivors. The RAF lost at least eight Hawker Hurricanes and the Fleet Air Arm one Fairey Fulmar. The Japanese lost five bombers and six fighters, one in a suicide attack on the Trincomalee fuel tanks.

During the day, nine of the Royal Air Force’s No. 11 SquadronBristol Blenheim bombers made the first ever Allied air attack against Nagumo's Carrier Force.[5] Bombing from 11,000 ft (3300 m) they scored no hits while losing five of their number to the Striking Force's Combat Air Patrol A6M2 Zeroes, four over the IJN Carriers and one due to an encounter with IJN aircraft returning from the Hermes raid, but in return shot down one Zero.[6][7]

The sortie demonstrated Japanese superiority in carrier operations, and exposed the unprofessional manner in which the RAF was run in the East, but it did not destroy British naval power in the Indian Ocean. It is arguable that, by making full use of signal intercepts, decryption, reconnaissance and superior radar, Somerville was able to save his fast carriers HMS Indomitable and Formidable to fight another day. However, it might equally be said that the blunders made by the Royal Navy meant that the main fleet from Addu was not able to make contact with Nagumo's force as it intended.

An invasion was feared by the British, who interpreted the Japanese failure to do so as due to heavy losses over Ceylon—and hence led to claims of a British victory. However, in reality the Japanese did not have the men, shipping or land-based air power to spare for an invasion and occupation, and were not even in a position to make a temporary occupation as a raid. The island did not face a real threat of invasion at any point during the war.

The island of Ceylon was strategically important, since it commanded the Indian Ocean. Thus it controlled access to India, the vital Allied shipping routes to the Middle East and the oilfields of the Persian Gulf. Ceylon held most of the British Empire's resources of rubber. An important harbor and naval base, Trincomalee, was located on the island’s eastern coast. Japanese propaganda had an effect on many of the Sinhalese population, who now awaited their arrival.

The raid had allowed the Imperial Japanese Navy to demonstrate their mastery of the Indian Ocean and Bay of Bengal and their ability to seize territory by capturing the Andaman Islands. Despite losses, the British fleet escaped conflict by retiring; in view of the overwhelming superiority of the Japanese, particularly in carrier operations, this seems to have been a wise decision by Admiral Somerville. Japanese plans were already made for a submarine base on the island of Madagascar to attack Allied shipping routes; now a weakened Ceylon invited invasion, possibly with limited objectives, like the taking of Trincomalee, a more convenient base.

That the British expected invasion—from their mastery of Japanese codes and other sources—is borne out by a speech that Admiral Sir Geoffrey Layton, the commander of Ceylon, made in mid-April to personnel of the damaged airfield, at China Bay in Trincomalee Harbor. He warned them, "The Japanese Fleet has retired to Singapore, to refuel and rearm, and to organise an invasion force, which we think is coming back to attack us." He ended by saying, "He was going for re-enforcements, while you men here, must be prepared to fight to the last man to stop the Japanese." The admiral's speech had a negative effect on personnel, particularly his reference to leaving the island for re-enforcements; afterwards he became known as "Runaway Layton".[citation needed]

Three British army divisions came to strengthen Ceylon’s defences against a possible internal anti-British uprising; also measures to improve morale were implemented, such as ensuring Sinhalese food rations were increased. Several minor mutinies against the British by native soldiers were quickly put down. Admiral Sir G. Layton remained in Ceylon for most of the war. Later, Ceylon would become an important base for the planned retaking of Malaya and Singapore.[citation needed]